For far too long, the American people have served the nation’s health care system, paying some of the highest drug prices and insurance premiums in the world for care no longer considered “the best.”
It is time the health care system serve the American people — and do so without bankrupting the entire country.
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It’s no small task. Donald Trump, the president-elect, this week announced his top choices for the job of “repeal and replace”: Rep. Tom Price (R.-Ga.) to head up the Department of Health and Human Services, and Seema Verma, MPH, an architect of Medicaid expansion under the Affordable Care Act (ACA) in Indiana, to head the Centers for Medicare & Medicaid Services (CMS).
If confirmed and on Trump’s team, they will be under intense pressure from Congress and the mainstream media to create a system that is sustainable, uses common sense, and employs market-based reforms to make health care once again worthy, sustainable, and affordable.
Called the “Dream Team” this week, these are obviously two people who have had some creative and viable ideas of their own throughout their careers. Price has a sophisticated understanding of tax policy, but his own proposal for “repeal and replace” hasn’t addressed how actual unsubsidized medical costs might be controlled. Called the “Empowering Patients First Act,” it includes refundable, age-adjusted tax credits for people to buy insurance themselves if they don’t have access to coverage through an employer or government program. His plan also includes provisions so that people in Medicare, Medicaid, or Tricare can opt out and get tax credits toward the cost of private coverage.
Medicare and Medicaid will consume just over $2 trillion — an increase of $600 billion a year in spending within the next four years.
Verma is well-versed in one of the thorniest issues — Medicaid reform. She is the architect of a nine-year-old “consumer-directed” Medicaid program called Healthy Indiana Plan (HIP). This gives beneficiaries something similar to a health savings account — it’s called a Power account — to apply toward a $2,500 deductible.
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Verma also helped create HIP 2.0, which expanded Medicaid coverage as part of the ACA using federal dollars. Launched in 2015 during the watch of the Vice President-Elect (then-Indiana Gov.) Mike Pence, HIP 2.0 points Medicaid managed care in a more conservative direction by, among other things, requiring beneficiaries to contribute an amount of money to their Power account each month that’s equal to 2 percent of their income. In return, they receive benefits not available with basic HIP, such as dental and vision coverage.
I doubt, however, that expecting Medicaid recipients to fund a HSA and pay a high deductible will go over well outside of Indiana. Expect Democrats to make hay over her role in this plan during her confirmation. But change is necessary, taxpayers — and here is why.
Last year the federal government spent just over $1.5 billion out of $3.9 billion, or 37 percent of every dollar it spent, on Medicare and Medicaid. This was a 9.3-percent increase over 2014 expenditures. But spending in every area of health care rose. Payments to the health care trust funds were up. Spending on CHIP, the plan for poor children, rose last year by 56 percent. Administrative expenses aren’t under control either — they were up 32 percent. At this rate, Medicare and Medicaid will consume just over $2 trillion — an increase of $600 billion a year in spending within the next four years.
We can’t tax our way out of this and Trump doesn’t need a new law to turn things around. Simply enforcing existing consumer protection statutes — Sherman, Clayton, and Robinson-Patman antitrust acts — would bring costs down immediately and require no act of Congress.
Overall, the Price prior approach, like the Ryan plan, is very intelligent, but they are walking into a trap if they eliminate the large employer mandate and don’t control actual unsubsidized costs of Medicare and Medicaid. The key to keeping federal spending down is to lower actual unsubsidized costs of care for all Americans.
Obamacare is the only major legislative proposal passed without bipartisan support. While the Democratic Party blames FBI Director James Comey for their loss, Americans are more interested in getting health care right. Price and Verma — with a Republican Congress — can fix this if they address the cost issues immediately and decisively.
Dr. Ramin Oskoui, a cardiologist in the Washington, D.C., area, is CEO of Foxhall Cardiology PC and a regular contributor to LifeZette.